Last month in Germany, the Federal Court made a ruling which moved to limit the liability of parents for their minor children’s illegal music sharing. The court’s decision stipulates that parents are not liable for the illegal music file sharing of their minor child if they have educated their children enough about the prohibition of participating in file sharing on the Internet.

The ruling represents a setback for the music industry, which demanded several thousand Euros for damages and legal fees. The case was triggered by a 13-year-old who illegally downloaded music and spread it on the net.

As Florian Drücke, the Head of the Federal Association of the Music Industry, warned, the judgment does not mean that parents no longer need to worry about the surfing habits of their children. “The recent statement of the Supreme Court should not be ‘misunderstood’ as a free ride for parents and their children to careless file sharing,” explained Drücke. “What concrete steps parents must take, especially for repeated violations, remains to be seen in the view of for the judgment.”

The issue is not about monitoring the children — we know that over-supervision is not a recipe for success when it comes to 13-year-olds. Rather, it’s about building their awareness for the value of music, films and books. The question is, how do you do that?

The music industry has often been criticized for having too few available digital music and streaming deals – which is one reason why illegal streaming services are so popular. Indeed, the industry seems slow to recognize that there is a large demand for legal services. The Bundesverband Musikindustrie has uncovered that in the context of BVMI market statistics, the digital music market grew by about 20% in the first half of 2011 and that we have more than 70 legal digital music services.

The biggest potential lies in the the so-called cloud-based music services.

According to an ABIresearch article on the topic, these cloud-based services will deliver music to over 161 million subscribers around the world by 2016, giving them access to their favorite songs anytime, anywhere. This development is driven by the growing use of mobile phones as music players, particularly smart phones.

The Digital Music Report states that still 95% of all downloads remain illegal! People are buying more music, but the damage caused by piracy will cost us more than a million creative jobs by 2015.

The international record industry has called on governments around the world to fight stronger against illegal music downloads from the internet. Frances Moore, the chairman of the World Federation of the Phonographic Industry (IFPI), said that countries like South Korea and France have already taken more stringent measures against piracy. Even though the demand for legal songs from the internet is growing, there are still 95% of all downloads are illegal.

The worldwide trend is still going away from the CD and is moving to music files from the internet. In 2010, sales of downloaded music rose by 6% to 4.6 billion U.S. dollars (3.4bn euros). Meanwhile, nearly a third of the total turnover for record companies comes from digital business.

The situation in Germany is still a little different. Germany is still a strong physical market. CDs still made up about 80% of sales in 2010. But the digital market continues to expand. For the past year sales grew by 33.2 percent!

For the first time worldwide a song has hit 10 million legal downloads: “Tik Tok” by U.S. pop singer Kesha was downloaded 12.8 million times. In second place was Lady Gaga’s “Bad Romance”, which was downloaded 9.7 million times.

The industry is looking forward to the future and hopes that the trend of legal downloads will grow. Cloud services just might increase the trend.

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The Orchard is a pioneering music, video and film distribution company and top-ranked Multi Channel Network operating in more than 25 global markets. Founded in 1997, we empower businesses and creators in the entertainment industry.